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September 12, 2011

Buffett Picks Another Dark Horse Successor

Little-known fund manager to start at Berkshire Hathaway in 2012

Warren Buffett has chosen another fund manager to further his succession plan, and once again it’s a candidate who has stayed pretty much out of the spotlight. Ted Wechsler of Peninsula Capital Advisors in Charlottesville, Va., will become the latest addition to the Berkshire Hathaway team in 2012, when he will join Todd Combs in managing the company’s equity portfolios.

Reuters reported that Wechsler, 50, has produced some impressive returns for his firm, handling about $400 million out of the firm’s approximately $2 billion under management. Over the last 11 years, Wechsler has brought in 1,236% in gains, say investors. Outside of his own firm, though, Wechsler is not well known; several of Buffett’s biographers, as well as Mario Gabelli, indicated that they were not familiar with his work. Combs was equally obscure when he joined Berkshire Hathaway.

Wechsler has been interested in Buffett for a while, according to the report, even winning the opportunity to lunch with the Oracle of Omaha twice in the last two years by bidding millions for charity—and then keeping it anonymous, even changing the usual New York steakhouse venue for somewhere on Buffett’s own patch in Omaha, Neb.

It was at this year’s lunch that Buffett broached the idea of coming to Berkshire to Wechsler. He was quoted in the report saying, "I very much wanted him to do it, but I didn't expect to get very far with the idea. Ted will no doubt make a lot of money at Berkshire. But he was already making a lot of money with his fund—you can get an idea of that from the size of his [charity] bids—so money wasn't a reason for him to come."

About those bids: Wechsler paid $2.63 million, not once but twice, to dine with Buffett. In June 2010 he was the winning but unidentified bidder on eBay for the charity event, and again in June of this year he placed the winning bid of just under $2.35 million against a much reduced field of bidders—then added enough money after the auction ended to top 2010’s bid by $111.

Buffett has said he may bring in a third manager as well, but the 81-year-old still manages most of the company’s $52.4 billion portfolio himself.